SCMP Tuesday, December 5, 2000


Realities of e-business lost on an irate travel industry

The travel industry Council of Hong Kong has mounted a three-day boycott against United Airlines. Although the action, which is due to end today, is largely symbolic it epitomises a more profound problem - that some local businesses have yet to come to terms with the new economy's impact upon them.
The bone of contention is the carrier's move to offer tickets online, which the council says are $200 cheaper than the retail prices offered by its members. It complains that United has previously taken the lead in slashing the commission for travel agents from nine to seven per cent of the ticket price. The agents are worried the online sales will further erode their narrow profit margins.
Other airlines usually launch their cyber-sales with online ticket prices set a few hundred dollars higher than those available through the conventional outlets. But the agents fear that other airlines will soon follow United's example, rendering it even more difficult for them to survive.
The council represents and monitors 1,180 licensed travel agencies. It was elevated into a public body in 1985 amid growing complaints about holiday-makers being ripped off by fly-by-night operations.
One of its avowed missions is to "protect the interests of both the trade and travellers". There is no question that the council has contributed to safeguarding the industry's interests. The issue is whether its current campaign against the airline is compatible with the interests of air travellers. After all, if the agents have their way, consumers will no longer be able to enjoy the price reduction offered by the airline.
What is best for the travel agents does not necessarily benefit travellers. Further confusing the situation is the reality that there are often conflicting interests within the travel trade itself, which means the council's mission statement is loftier than it can deliver.
The body was trapped in another dispute a few months ago when its members threatened not to use the EPS payment service. This was in protest against an increase in service fees, which were estimated to cost the agents an extra $150 million a year, a burden that would eventually be passed on to customers.
On that occasion, public opinion was more sympathetic to the travel industry. But the travel agents can hardly be expected to secure much public support for their latest demand. Consumers are pragmatic and not in the least concerned about any feud between the airlines and travel agents. Their bottom line is whether they have to dip deeper into their pockets for the same products.
Online shopping is still far from commonplace in Hong Kong, yet e-commerce has made one-to-one marketing possible. Prices could be reduced by rebating to the buyers the cut normally reserved for the middlemen. Most stockbrokers, for example, are already resigned to the prospect of redundancy once the market gets used to online trading.
The Consumer Council has given its blessing to online ticketing, warning the travel agents that their efforts against the airline might undermine free and fair market practices.
The emerging trend of reducing commissions for retailers is irreversible. Instead of fighting an impossible war, it would be more productive for travel agents to figure out what kind of added value they could bring to sustain their role as go-betweens. Providing travel advice, enhancing customer satisfaction and bundling ticket sales with other related services are just some of the many options.
There is no denying that travel agents are already caught in cut-throat battles. But standing in the way of technological progress does not even remotely resemble any sensible, long-term strategy for survival.
Andy Ho ( ) is a political commentator.